PLNationalmedium
A homeowner carries an ISO HO-3 policy with $400,000 Coverage A and accepts default sub-limits. A detached garage on the same lot is destroyed by fire. What is the maximum Coverage B (Other Structures) limit, absent an increased-limit endorsement?
A$20,000 (5% of Coverage A)
$40,000 (10% of Coverage A)
C$80,000 (20% of Coverage A)
D$200,000 (50% of Coverage A)
Why this is the answer
Coverage B (Other Structures) on the ISO HO-3 Special Form is provided as additional insurance equal to 10% of Coverage A. With Coverage A at $400,000, the default Coverage B limit is $40,000. This limit applies to detached structures used for non-business purposes — typical examples include detached garages, tool sheds, gazebos, fences, driveways, and in-ground swimming pool surrounds. The limit is in addition to, not part of, Coverage A, so a total dwelling loss does not exhaust Coverage B (ISO HO 00 03 Section I — Coverage B).
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